Legal Question in Real Estate Law in California

Re: grand deed (quite claim deed)

If you are already on title as 'joint tenants' you shouldn't need to do anything else with title. Do the same to title on her bank accounts, or have her transfer them to you now if she trusts you. If the house is her only substantial asset, she doesn't need a trust, only a will to say who her other property goes to, like furniture, etc. She can make a will as long as she is 'competent' and not mentally impaired. When she dies, the house becomes the property of the remaining joint tenants. Her life insurance [if payable to you] could be used to pay off the debts or martgage. Make sure you are named as the beneficiaries of the life insurance. If not paid off, the mortgage will still be due each month. Her bills and debts should be paid from her assets. You would not be personally liable for her debts beyond the amount of her assets you receive - not the house. If you want to get legal help to insure that this is all done right, feel free to contact me.

Re: grand deed (quite claim deed)

If the house was bought long ago and has appreciated, there may be negative tax consequences of receiving ownership interests by gift during your mother's lifetime, versus inheriting via a will or a living trust. You probably shoulda set up a trust four years ago rather than being "put on title." It is generally better to inherit appreciated property than to receive it as a gift, because its so-called "cost basis" for capital gains purposes is re-set to the value at death if inherited, but original cost if it is a gift. Hence, when the younger generation eventually sells the property, they pay lower capital gains on inherited property, whether inherited by will or trust.

Nex question is whether the property is now owned as joint tenants (as Mr. Nelson discusses) or as tenants in common. If you are joint tenants, the two of you will become the co-owners automatically, as a matter of law, on your mother's death, without need or a will, trust, probate or whatever. If, on the other hand, you are tenants in common, your mother's share will pass according to will, trust, or if none, according to the rules of intestate succession. You'd probably end up the same way, if there are no other siblings, but the matter would go through probate. So, it's rather important to review your title (perhaps by looking at the deed used to set up the present three-way holding of title) to see how it's vested.

There may be a tax-saving strategy if title is held as joint tenants; you could break the joint tenancy, switch to tenancy in common, and place mom's share in a living trust. She is probably still legally competent to do so. Of course, a stranger like myself is not in a position to recommend strategies, merely to suggest that you sit down with an estate planner and go through the numbers. So here are answers by the numbers:

(1) Before making any changes, review how the property is now held, then take all your numbers (original price, current market value, etc. to an estate-planner and have her/him compare the taxes under your proposal vs. possible backing out of a joint tenancy and into a living trust vs. doing nothing.

(2) When your mom passes away, the existing loan on the house is not forgiven. It remains a lien on the house and the estate (heirs) needs to make the payments or the lender can foreclose. It is possible there is some kind of mortgage life insurance in effect, so check this.

(3) You don't have to come up with the money from any particular source, but you do need to come up with money from somewhere to pay the estate's liabilities before you can take a dime or a silver teaspoon. Often, the estate will be administered by an executor or court-appointed administrator. This is part of the probate process (about which I am not an expert).

(4) I think life insurance proceeds are usually paid to the beneficiary or beneficiaries without earmarks or requirements that they be used for any particular purpose.

(5) Probably not.

Re: grand deed (quite claim deed)

I concur with Attorney Whipple, there are serious tax consequences you can face the way the title was transferred as opposed to transfer through a trust.

You will definately need to check how the title is written before anything else.

Our firm specializes in wills, trusts, estate planning and probate so if you decide to have her form a trust, we would be happy to assist you.

If you want to learn a little about Probate and how to avoid it, please also feel free to browse our firm's site located at No-Probate.com.

Scott

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